Social Security Reform, Emerging Hot Topic of 2016 Presidential Campaign

It’s still early in the 2016 race for the White House, but the political posturing has begun. Political leaders across the nation are stepping up to bat addressing the long-term costs and expenditures of Social Security and Medicare programs, making it a possible centerpiece of the 2016 presidential campaign.

Within days of one another, GOP presidential candidate Jeb Bush and New Jersey Governor Chris Christie have individually proposed raising the retirement age in an effort to maintain the solvency of these programs.

Generations after President Franklin D. Roosevelt signed the Social Security Act in 1935, the Social Security Trust Fund’s combined retirement and disability benefits are falling short and projected to be exhausted by 2033, when it will cover only 77% of benefits.

A common misunderstanding is that the Trust Fund is sole source of funding for Social Security benefits. Fortunately, that fund serves as surplus backing.

Remember those pesky FICA taxes on paychecks? That’s what pays the majority of Social Security retirement and disability benefits, paid by current workers, while any excess taxes are added to the Trust Fund.

The concern is that since 2010, an insufficient amount of money has been collected to pay these benefits, causing money to be pulled from the Trust Fund. The Trustees project that the deficit will average $77 billion between 2014 and 2018 before sharply increasing.

That’s where support for change stems, but reformers have different ideas of how it should be done.

In addition to raising the full retirement age from 67 to 69 and the early retirement age from 62 to 64, Christie proposes reducing Social Security retirement benefits for those earning more than $80,000 a year in other income and eliminating the benefits entirely for retirees making more than $200,000.

"Unless we deal with this crisis, the young people of this country will get poorer; the disparity between young and old, the working middle class and the retired will grow even larger," said Christie. "Our economy will grow even weaker. Our debt will skyrocket."

That same week, the former Florida Governor Bush also backed hiking the retirement age during a speech at the New Hampshire Institute of Politics at Saint Anselm College—the same venue Christie outlined his reform package—but did not give a specific age.

"I think we need to raise the retirement age, not for people that are already nearing, receiving Social Security, or already on it, but raise it gradually, over a long period of time for people that are just entering the system," Bush said. "And I think we need to do that in relatively short order."

Former Arkansas Governor Mike Huckabee strongly criticized Christie’s proposal. "I'm not being just specifically critical of Christie," Huckabee said in an April 2015 speech. "But that's not a reform. That's not some kind of proposal that Republicans need to embrace. Because what we're really embracing at that point, you're embracing a government that lied to its people. That took money from its people under one pretense, and then took it away from them at the time they started wanting to actually get what they paid for all these years."

Some progressives are taking a drastically different approach. Instead of restraining Social Security benefits, Senator Elizabeth Warren (D-Mass) proposed a budget amendment in late March calling for a “sustainable expansion of benefits” that won all but two Democratic votes. Although it was defeated, the roll call vote signals politicized the issue is.

Separate legislation that now has 58 co-sponsors in the U.S. House of Representatives would boost benefits, and increase payroll taxes to fund overhead costs. Former Maryland Democratic Governor Martin O’Malley, another potential 2016 presidential candidate, is among the supporters.

Democratic presidential candidate Hillary Clinton has not voiced her stance on expanding Social Security, but will have plentiful opportunities to do so during her run for president.

While political leaders remain divided on how to resolve the projected shortfall of Social Security benefits, what’s clear is that the dialogue concerning federal retirement benefits programs will be a hot topic for the 2016 presidential campaign. American Retiree is staying tuned.